February 22, 2010

Argentina's beef consumption to drop on higher prices

Beef consumption in Argentina is expected to drop to 50kg cwt per capita in 2010 from 70kg cwt in 2009, due to an expected fall in beef production that would inevitably boost prices.

Tightening supplies have driven up local beef prices by 40% in the month to February 13, 2010.

Local analysts expect beef production to fall by around one million tonnes cwt this year, as producers rebuild herds. Slaughter is forecast to decline 30% to 11.5 million from 2009's record slaughter of 16.3 million head.

Last year's high slaughter was the result of the herd liquidation, influenced by restrictive government policies to control beef price rises in the domestic market, and the severe drought experienced since mid-2008. Lighter average slaughter weights also resulted from the subsidies focused on light steer production for the domestic market.

According to industry sources, the government will continue to subsidise feedlot production and cap prices at the saleyards and at wholesale.

In addition, the government has announced that the issuing of export certificates and "Hilton" quota allocations will be distributed to packers who supply the domestic market at low prices, limiting Argentina's exports in 2010.